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DKS or FIVE: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Retail - Miscellaneous sector might want to consider either Dick's Sporting Goods (DKS - Free Report) or Five Below (FIVE - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Dick's Sporting Goods and Five Below are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
DKS currently has a forward P/E ratio of 10.67, while FIVE has a forward P/E of 40.92. We also note that DKS has a PEG ratio of 2.13. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FIVE currently has a PEG ratio of 2.16.
Another notable valuation metric for DKS is its P/B ratio of 4.25. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FIVE has a P/B of 8.96.
These are just a few of the metrics contributing to DKS's Value grade of A and FIVE's Value grade of C.
Both DKS and FIVE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DKS is the superior value option right now.